Russia and Saudi Arabia have a common position on the future of the oil output cut deal, Russian Energy Minister Alexander Novak said on Thursday, while Russia’s Lukoil said the deal should remain in place but needs to be altered.
“We have a common position,” Novak said at an economic forum in St Petersburg, which Saudi Arabia’s Energy Minister Khalid al-Falih is also expected to attend.
The Saudi-led Organization of the Petroleum Exporting Countries and other large oil producers, notably, Russia, have agreed to reduce output by 1.8 million barrels per day until the end of the year.
Some oil market participants have expressed concerns about potential oil shortages amid production decline in Venezuela and after U.S. President Donald Trump’s announced plans to pull the United States out of the Iran nuclear deal.
Saudi Arabia has indicated that it could raise its oil output to offset any potential supply deficit.
For the first time in more than five years, Saudi Arabia and other oil producers are feeling the political pressure from consuming nations. U.S. President Donald Trump directed his ire against OPEC last month, saying in a tweet that “oil prices are artificially Very High! No good and will not be accepted!”
Vagit Alekperov, head of Russia’s No.2 oil company Lukoil, which produces over 1.7 million barrels per day, said it was time to raise oil production as prices have hit $80 per barrel, a level not seen since late 2014.
OPEC and non-OPEC countries will meet in June in Vienna to discuss their cooperation and the future of the deal.
Novak is scheduled to meet this week with his Saudi counterpart and with United Arab Emirates Energy Minister Suhail Al Mazrouei — who currently holds the position of OPEC president. Next week or the week after, the Russian minister plans to meet oil bosses to discuss the deal.
There’s scope for Russia to continue its agreement with OPEC beyond 2018, but “flexibility” must be built into the accord, Lukoil CEO Vagit Alekperov said at a briefing in St. Petersburg.
“We shouldn’t breach the deal but it should become more flexible — follow the market movements,” Alekperov said. “The market has rebalanced” and $80 a barrel is “already high enough.”
“I hope that minister Novak will gather us before the meeting… the oil price at $80 is already high,” Alekperov said.
Novak said he believed oil prices average more than $60 per barrel in 2018, the RIA news agency reported.
Gazprom Neft CEO Alexander Dyukov said in an interview that it would be “right for the deal participants to increase production quotas” to avoid overheating the market.